Global markets were slightly higher overnight as investors awaited US Federal Reserve Chair Janet Yellen’s semi-annual testimony to Congress and the start of the latest quarterly earnings season.
Yellen will testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday. Her comments will be scrutinised for fresh clues on the timing of the Fed’s third rate hike this year as well as the unwinding of its balance sheet. Given the relatively high level of valuations at the current juncture, the upcoming earnings season will be watched very closely by investors. US quarterly earnings announcements kick off later this week with some of the major Banks set to announce profit figures on Friday.
Stock in Focus: Bellamy’s Australia (BAL.AX)
We have discussed Bellamy’s (BAL.AX) as recently as last month when the company announced a capital raise and we highlighted that we remained unconvinced by BAL’s capital raise plans. As we touched on yesterday, BAL has entered another trading halt as it announced its recently-acquired Victorian canning facility has had its crucial Chinese licence suspended by regulatory authorities. BAL shares are expected to resume trading today.
In our view, this is the latest in a number of management errors and once again highlights poor management and raises serious concerns. We have highlighted previously that A2 Milk (.NZ / A2M.AX) is our preferred sector play, particularly as recent results speak volumes about A2 management’s superior agility and execution versus Bellamy’s.
Members can login to read our full reports on A2 Milk.
Australia & New Zealand Market Movers
The Australian share market kicked off the week higher (ASX 200 index +0.36%) with the financials leading widespread gains across almost all sectors. Mining-related materials and healthcare were the only sectors to finish lower. In stock news, South32 shares have dropped after the diversified miner said its Appin coal mine in NSW will remain closed for an “extended” period due to a safety review.
The New Zealand market lost ground on Monday (NZX 50 index -0.5%) led by Fletcher Building and Auckland International Airport down while Air New Zealand reached a 16-year high..
3 Things Markets Will be Watching this Week
1. How the US Technology sector trades following recent volatility.
2. Fed Chair Janet Yellen will give her testimony to the House of Representatives late in the week
3. Chinese trade data is released on Thursday.
Have a Great Day,
Team
